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Skyworks' Beat And Raise A Positive Read Thru For Micron, Broadcom, Silicon Motion

SIMO, SWKS, MU | January 20, 2017

Skyworks Solutions Inc (NASDAQ: SWKS) reported its FQ1 2017 results ahead of expectations and raised its guidance for FQ2. The beat and raise has a “positive read thru to mobile handset supply chain,” Loop Capital Markets’ Betsy Van Hees said in a report.

Van Hees has a Buy rating on Micron Technology, Inc. (NASDAQ: MU), Broadcom Ltd (NASDAQ: AVGO) and Silicon Motion Technology Corp. (ADR) (NASDAQ: SIMO).

Beat And Raise

Skyworks reported its FQ1 2017 revenue at $914.3 million, ahead of the Street estimate of $902.6 million, and pro forma EPS at $1.61, versus the Street estimate of $1.58. The company guided to FQ2 revenue and pro forma of $840 million and $1.40, ahead of the Street estimates of $816.8 million and $1.39, respectively.

Positive Commentary

Skyworks provided upbeat commentary on “the seasonal demand trends of the mobile handset market and the inventory supply chain in China that we believe bears had been betting against,” Van Hees mentioned. She added that the “short squeeze from bears miscalculation” was what had driven the company’s shares up 8 percent in after-hours trading on January 19.

Positive Read Thru

Skyworks was the first semiconductor company to report earnings in January and provide guidance for “what is seasonally the weakest quarter for the overall semiconductor industry,” the analyst noted.

Skyworks' better-than-seasonal guidance, upbeat commentary on demand trends and channel inventory are a positive read thru to semiconductor companies that have “similar exposure to the mobile handset market,” Van Hees said. She added that Micron Technology, Broadcom and Silicon Motion had the highest exposure in Loop Capital Markets’ coverage.